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      in UK Politics

      Four million families face ‘significant decline’ in income under plans to scrap universal credit increase

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      Four million households face a “significant decline” in their income under government plans to scrap the £20 a week increase in universal credit, a report has warned.The Institute for Fiscal Studies said that millions would lose an average of 13 per cent of their benefits if the cut goes ahead in April as planned. The think tank said the UK’s welfare system is “ripe for reform” as it laid out the choices facing the government.  With unemployment already rising and forecast to spike over the winter, many more households are expected to be reliant on the UK’s benefits system, which is one of the least generous of any wealthy nation’s.
      Read moreThe government again this week resisted calls to keep the £20 uplift brought in at the start of the pandemic.
      Even with the increase, a single childless worker on average earnings who lost her job receives just 17 per cent of her usual income in benefits, the IFS calculated.  That compares with an average of 20 per cent in the members of the Organisation for Economic Co-operation and Development (OECD).
      However, the true gulf is much wider — 17 per cent versus 55 per cent — once contributory benefits are taken into account.These are benefits where the level of payment depends on your work history, and these benefits make up a far larger proportion of most other countries’ welfare systems.New research from the IFS lays out “tough choices” for the government. Ministers could choose to make the £20 per week increase permanent, which would add 10 per cent to the cost of universal credit, though that would “undo at most two-thirds of the benefit cuts made since 2015, let alone those made during the coalition”, the IFS said.
      If the government chose to make all of its temporary increases to benefits permanent, the overall costs of the system would increase by a quarter this year
      Read moreThat would mean as much as an extra £26bn added to the benefits bill this year, if unemployment rises and earnings fall in line with expectations, the IFS said.
      “Regardless of the decision made about the size of the [benefits] system, the government should certainly take the opportunity to improve aspects of the working-age welfare system that were already ripe for reform before the crisis,” the IFS said.
      During his winter economic statement, Rishi Sunak, the chancellor, made it clear the government was not extending the temporary uplift in payments, despite pressure from opposition parties and campaigners.  Tackled twice on the issue by the SNP’s Westminster leader Ian Blackford at Prime Minister’s Questions on Wednesday, Boris Johnson refused to commit to making the increase in universal credit permanent, simply telling MPs the government would “continue to support families across this country”.Pressed a third time by the Labour MP Stephen Timms, the prime minister added: “Of course, we keep all these things under constant review.”
      Liberal Democrat DWP spokesperson Wendy Chamberlain said the government would be guilty of “heartlessness at its worst” if it cuts benefits while millions of people are struggling.
      “With the furlough scheme due to end this month and more business lockdowns expected soon, unemployment is set to soar. If Ministers go ahead with their plan, millions will face financial ruin,” she said.
      “The boost to welfare payments must be extended beyond next April alongside the extension of furlough. Ultimately, this should only be the start of a fundamental re-think of our welfare system.”
      The IFS also recommends reforming housing benefit, which had “bizarrely” been linked to rents in each local area in 2011. This meant families in areas that have since become more expensive were eligible for less support than otherwise-equivalent families in low-rent ones.That was temporarily scrapped in March, with housing benefit linked to current rents, an improvement that should be made permanent, according to the IFS.Pascale Bourquin, a research economist at IFS and an author of the report, said: “There may well be a case for a more generous benefit system, but not necessarily in the way in which increases were implemented at speed this year.  “A more serious review of the treatment of, for example, housing costs and of the self-employed is required. Simply reverting to the pre-Covid system would mean going back to a world where self-employed UC claimants are penalised for having incomes that fluctuate within the year, and where housing benefits are based on local rents from a decade ago.”A Department for Work and Pensions spokesperson said: “This government is wholly committed to supporting the lowest-paid families and has already taken significant steps, including raising the living wage, ending the benefit freeze and increasing work incentives.
      “During this challenging time we have provided £9.3 billion extra welfare support to help those most in need, as well as introducing income protection schemes, mortgage holidays and additional support for renters, and constantly keep these measures under review.” More

    • 125 Shares169 Views

      in US Politics

      Demand surges for Regeneron drug that Trump claims ‘cures’ Covid-19

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      Doctors are reporting a spike in enquiries by patients for an experimental Covid-19 drug cocktail after Donald Trump called the Regeneron Pharmaceuticals drug “a blessing from God” that is a “cure” for the virus.Two doctors involved in the trial of the drug told Reuters that more patients are asking to participate in the drug’s trials, though medical experts have pointed out the drug, REGN-COV2, is still too early in its trial period to confirm that it can help treat Covid-19.On Wednesday, just hours after Trump praised the drug as the “cure” for the virus, Regeneron announced that it submitted an application to the Food and Drug Administration’s (FDA) for an emergency use authorization of the drug, which is a cocktail mix of two antibodies meant to aid the immune system in fighting the virus.Regeneron’s stock, and the stock of Eli Lilly, another pharmaceutical company conducting drug trials for an anti-body treatment, soared Thursday after Trump touted the treatment.“The politics of the situation would suggest to me that the story could be Trump gets Covid … then American technology fostered by the Trump administration cures Covid,” said Dr Dirk Sostman, head of research network at Houston Methodist Hospital, a trial site for Regeneron’s antibody program, who told Reuters that more patients were seeking to take part in the trial. “I would think there would be pressure on regulators [to approve the drug],” he said.Though Trump said that “hundreds of thousands” of doses were ready for use, Regeneron said that it actually has enough doses for 50,000 patients and would have enough for 300,000 patients in the coming months. The company has said 275 patients participated in the first phase of the drug trial.The US has more than 7.5m confirmed cases of Covid-19 and over 212,000 people have died of the disease, according to Johns Hopkins University.Because the drug is in clinical trials, it is only available to patients who are accepted into the trial. With approval from the FDA, drug companies can offer a treatment to patients not participating in trials under “compassionate use” rules, which are meant to make treatments accessible to patients with a life-threatening condition that has no alternative therapies available. Regeneron said that under 10 people have been given its drug under the rules.Doctors on Twitter have been voicing their concerns about promises of a cure when the treatment is still nascent.“We don’t know if it works. We don’t know about patient outcomes because it hasn’t been studied enough. Frankly, [Trump] is an anecdote,” said Dr Rob Davidson, an emergency room physician in Michigan and executive director of the Committee to Protect Medicine, in a video on Twitter.Regeneron’s drug is just the latest treatment that Trump is touting as the cure to the virus without the evidence medical experts say is necessary to actual confirm a treatment is safe and effective. In the spring, Trump infamously announced he was taking anti-malaria drug hydroxychloroquine in an attempt to prevent Covid-19, though the FDA warned against using the drug for that reason. Just a month later, the FDA revoked its emergency authorization for the drug citing growing evidence that it did not work to prevent the virus and that it had serious side effects. More

    • 88 Shares189 Views

      in World Politics

      Will China’s Digital Currency Revolutionize Global Payments?

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      China is well on its way to becoming a cashless society. More than 600 million Chinese already use Alibaba’s Alipay and Tencent’s WeChat Pay to pay for much of what they purchase. Between them, the two companies control approximately 90% of China’s mobile payments market, which totaled some $17 trillion in 2019. A wide variety of sectors throughout China have since adopted Blockchain to pay bills, settle disputes in court and track shipments. The Chinese government understands that, via Blockchain, the issuance of its own cryptocurrency is an excellent way to track and record the movement of payments, goods and people.

      Beijing Wants to Rewrite the Global Rulebook

      READ MORE

      The unsexily named Digital Currency/Electronic Payments (DCEP) is intended to be used by anyone around the world to purchase anything. It has the potential to revolutionize the global payments system. Assuming it succeeds, many other countries will want to emulate it. Some other governments have already launched similar initiatives, but not on the scope or scale of the DCEP, which promises to be the first global digital currency.

      Digital Wallets

      What appears to have spurred the Chinese government to actively pursue the DCEP in 2019 was the birth of an organization that also has the potential to revolutionize the global payments system, the Libra Association. Libra is a grouping of more than two dozen organizations creating the world’s first Blockchain-derived global payment system, specifically founded on best practices in regulation and governance. Its stated objective is to transparently bring access to financial services to billions of people who either have limited or no access to the existing global banking system.

      Embed from Getty Images

      Given that it is an American-led initiative that will use the US dollar to determine its benchmark value, Beijing viewed Libra as an attempt to establish US dominance over the global cryptocurrency marketplace. It previously viewed other cryptocurrencies as a threat to its own hegemony over capital controls in China.

      Although its motivations to counter the US are clear enough, much remains unknown about the DCEP. One has to wonder just how much focus it will have on transparency, governance or best practices. It will not be available on cryptocurrency exchanges, nor will it be available for speculative purposes. Embracing Blockchain and creating a DCEP ecosystem will give the Chinese Central Bank unprecedented power over capital movements — certainly in China, but also around the world.

      Like Alipay and WeChat, the DCEP will require a digital wallet, but it will not require a bank account. Commercial banks will issue the digital wallets, but no internet connection will be required to conduct transactions via the DCEP. All that will be required is that a phone has battery power. While a certain degree of anonymity will be present with the DCEP, the Chinese Central Bank will still be able to track who spent or received funds, when, where and from whom. The Chinese government calls the concept “controllable anonymity” and will rely on Big Data to identify behavioral characteristics of the individuals and businesses using DCEP. Doing so will help the government identify money laundering, tax evasion and terrorist financing. It will, of course, also permit a higher degree and quality of state surveillance of Chinese citizens and citizens of any other country that may use it.

      Since the Chinese government will be the first to launch a global digital currency, it will gain a considerable lead over the world’s nations and provide it with the ability to perfect its surveillance capabilities in China and around the world for any country that chooses to adopt the DCEP. It will also help to internationalize the yuan and simultaneously create less dependence on the US dollar. So, the Chinese government intends to stay a step ahead of the competition, enhance its ability to monitor its citizens, broaden its soft power and increase China’s appeal to other countries while countering the supremacy of the US dollar in the process.

      Alternative System

      By issuing the DCEP, the Chinese government hopes that demand for yuan reserves will follow, facilitating a digital version of the yuan as a global alternative to dollar reserves, especially in Belt and Road Initiative (BRI) member nations seeking to modernize their financial sectors. It could also help internationalize China’s e-payment systems, which are not used outside of China. In the absence of an American cryptocurrency, which seems to be a long way off, doing so could in theory make the DCEP the cryptocurrency of choice among BRI (and other) countries.

      Such an alternative system may be particularly appealing for countries under US sanctions, which may wish to avoid using the US dollar entirely, or for countries or businesses engaged in trading, investment or lending with Chinese companies. But the yuan remains not fully convertible, with just 1% of international payments using it. That could have a significant impact on the government’s implementation strategy. In addition, the Chinese government is attempting to centralize what is a decentralized technology by requiring that all “nodes” using the Blockchain register with the government and provide information about their users.

      While the Chinese people are accustomed to having their government pry into, and try to control, their private lives, most of the world’s population wants nothing of the sort. It remains to be seen just how broadly the DCEP will be adopted, or whether it will turn out to be a net positive for the nations that choose to use it, but having the first-mover advantage will surely serve Beijing well. Despite its apparent flaws, if it also helps to bring some of the world’s poorest nations with the least access to basic and global financial services on par with the world’s developed nations in that regard, Beijing will have done much of the world’s population a great service in the process.

      *[Daniel Wagner is the author of “The Chinese Vortex: The Belt and Road Initiative and its Impact on the World.”]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More